Ghana’s cocoa buying companies owe local banks up to US$750 million, raising concerns about liquidity risks in the West African nation’s financial system as the sector grapples with poor harvests, low prices, and rising debt, industry officials said Thursday.
The Licensed Cocoa Buyers Association of Ghana (LCBA) estimated that licensed buyers collectively owe banks between seven and eight billion Ghanaian cedis (US$650 million–US$750 million), in addition to 2.2–2.5 billion cedis owed directly to cocoa farmers. The arrears have strained cash flows across the cocoa supply chain and could have ripple effects on the broader banking sector if left unaddressed.
“The interest keeps piling up,” Samuel Adimado, LCBA president, told AFP. “Buyers have been forced to take on loans to pre-finance cocoa purchases, especially given delayed payments from Cocobod, the government’s cocoa regulator.”
Ghana, the world’s second-largest cocoa producer, has suffered two consecutive seasons of poor output due to crop diseases and adverse weather. The twin shocks have coincided with weak global cocoa prices, leaving a surplus of unsold beans across the country and in neighbouring Ivory Coast, which together account for roughly half of global cocoa supply.
London cocoa futures recently fell to near a three-year low, reflecting diminished demand and oversupply, according to market analysts. The situation has compounded financial pressure on licensed buyers, who rely heavily on bank credit to purchase cocoa from farmers and finance operations until payments are made by Cocobod.
Cocobod’s delayed payments and expanded spending on non-core activities such as road construction have contributed to the financing gap, Adimado said. Licensed buyers delivered about 580,000 metric tonnes of cocoa to Cocobod this season but are still awaiting full payment, while roughly 70,000 tonnes remain in the field awaiting purchase.
The Ghanaian government has announced measures aimed at easing the liquidity crunch. These include reducing the fixed producer price for cocoa and introducing a cocoa financing scheme to inject additional cash into the sector, authorities said. Around 100,000 tonnes of cocoa will fall under the revised price arrangement, which is expected to provide immediate relief to struggling buyers.
The banking sector, still recovering from the government’s 2023 Domestic Debt Exchange Programme (DDEP), remains exposed to the sectoral debt. The DDEP, which converted short-term government and Cocobod cocoa bills into longer-term bonds at lower coupon rates, strained capital buffers and led to record losses for lenders.
John Awuah, CEO of the Ghana Association of Banks (GAB), said banks are managing the growing exposure through loan restructurings and additional monitoring measures. “The system appears resilient, but careful management is needed to maintain stability and compliance with Ghana’s International Monetary Fund programme,” he said.
Analysts warn that if cocoa sector liquidity pressures persist, they could delay payments to farmers, reduce export volumes, and affect government revenues. Cocoa remains a cornerstone of Ghana’s economy, generating foreign exchange and supporting millions of rural livelihoods.
Despite these challenges, industry stakeholders remain cautiously optimistic that government intervention and the proposed financing scheme could stabilise the sector ahead of the next harvest. Officials say timely payments, improved production, and stronger global demand will be critical for maintaining a sustainable supply chain and avoiding systemic banking risks.
The situation underscores the vulnerability of Ghana’s cocoa-dependent economy to both domestic financial shocks and fluctuations in global commodity markets, highlighting the need for better risk management and sectoral planning to safeguard farmers, buyers, and the broader financial system.
